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Just Make Sure You’re Hedged.

Stocks hit new records on Tuesday as Irma and North Korea are now distant memories for traders. That, despite the fact that we’re only beginning to assess the damage from the storm and despite new sanctions on the North that will invariably exacerbate the standoff with Pyongyang.

Never one to miss an opportunity to employ some hyperbole, Trump said this on Tuesday afternoon:

We had a vote yesterday on sanctions. We think it’s just another very small step. But those sanctions are nothing compared to what ultimately will have to happen.

We’re going to have to bomb them. Got it. Thanks, Mr. President.

Still, we’ve now recouped “fire and fury” on the S&P:

Treasurys were under pressure again amid the risk-on tone and after a poor 10Y auction (primary dealers awarded biggest share since November) seemed to suggest some trepidation ahead of this week’s CPI print. 10Y yields are up some 15bps since Friday, when traders were pricing in armageddon:

Bitcoin fell after Jamie Dimon delivered a reality check to a world gone crypto-crazy. “It’s a fraud,” Dimon said, adding that he’d fire anyone he caught trading it for “being stupid.”

European shares rose again, and are now up handily on the week so far:

This is the best stretch for European equities since April. Our buddy Kevin Muir is excited…

The FTSE fell and you can probably guess why. Here’s a hint:

GBPUSD surged to a one-year high on Tuesday, building on early gains after a hotter-than-expected August inflation print suggested the BoE could begin to lean more hawkish, starting on Thursday. And so, the stronger pound weighed on UK equities (as a reminder, FTSE 100 companies get most of their sales from abroad):

USDJPY is now back above 110 as the haven bid evaporates despite new sanctions on North Korea that seem to have aggravated Kim already. USDJPY is now up more than 2.5% off the Friday lows:

A weaker yen and a lack of ICMB launches led the Nikkei to its best two-day gain since early June:

Emerging market stocks are closing in on six-year highs:

Brent rose and WTI meandered higher on more OPEC rumors. As noted this morning, the ubiquitous “people familiar with the matter,” now say the cartel is debating whether to extend production cuts past the end-March expiration date, possibly into the second half of 2018. “It’s bullish in the sense that they are willing to do it, but it’s effectively bearish that they have to,” Kyle Cooper, director of research at IAF Advisors, noted.

The yuan has seemingly stabilized after the PBoC managed to engineer some depreciation after months of strength by effectively outsourcing the job via the removal of a reserve requirement on forwards. Here’s where we stand – a kind of stalemate:

Watch those fixings.

Oh, and fund managers who together have some $630 billion in AUM are adding tail hedges at the fastest pace in 14 months: